Copyright © 2010 Pearson Education, Inc.Copyright © 2007 Pearson Education, Inc. Slide 1-1 ELC 200 Day 3

Agenda Questions? Assignment 1 posted  Due Monday, January 9:35 AM  assignment1.pdf assignment1.pdf Finish E-commerce Business Models and Concepts Begin the Internet and the WWW

Copyright © 2010 Pearson Education, Inc. E-commerce Kenneth C. Laudon Carol Guercio Traver business. technology. society. Sixth Edition

Copyright © 2010 Pearson Education, Inc.Copyright © 2007 Pearson Education, Inc. Slide 1-4 Chapter 1 The Revolution Is Just Beginning

Copyright © 2011 Pearson Education, Inc. B2B Business Models Net marketplaces  E-distributor  E-procurement  Exchange  Industry consortium Private industrial network  Single firm  Industry-wide Slide 2-5

Copyright © 2011 Pearson Education, Inc. B2B Models: E-distributor Version of retail and wholesale store, MRO (maintenance, repair & operations) goods and indirect goods Owned by one company seeking to serve many customers Revenue model: Sales of goods Example: Grainger.com Slide 2-6

Copyright © 2011 Pearson Education, Inc. B2B Models: E-procurement Creates digital markets where participants transact for indirect goods  B2B service providers, application service providers (ASPs) Revenue model:  Service fees, supply-chain management, fulfillment services Example: Ariba Slide 2-7

Copyright © 2011 Pearson Education, Inc. B2B Models: Exchanges Independently owned vertical digital marketplace for direct inputs Revenue model: Transaction, commission fees Create powerful competition between suppliers Tend to force suppliers into powerful price competition; number of exchanges has dropped dramatically Slide 2-8

Copyright © 2011 Pearson Education, Inc. B2B Models: Industry Consortia Industry-owned vertical digital marketplace open to select suppliers More successful than exchanges  Sponsored by powerful industry players  Strengthen traditional purchasing behavior Revenue model: Transaction, commission fees Example: Exostar Slide 2-9

Copyright © 2011 Pearson Education, Inc. Private Industrial Networks Designed to coordinate flow of communication among firms engaged in business together  Electronic data interchange (EDI) Single firm networks  Most common form  Example: Wal-Mart’s network for suppliers Industry-wide networks  Often evolve out of industry associations  Example: Agentrics Slide 2-10

Copyright © 2011 Pearson Education, Inc. Other E-commerce Business Models Consumer-to-consumer (C2C)  eBay, Craigslist Peer-to-peer (P2P)  The Pirate Bay, Cloudmark M-commerce:  Technology platform continues to evolve  iPhone, smartphones energizing interest in m-commerce apps Slide 2-11

Copyright © 2011 Pearson Education, Inc. Insight on Society Where R U? Not Here! Class Discussion Why should you care if companies track your location via cell phone? What is the “opt-in” principle and how does it protect privacy? Should business firms be allowed to call cell phones with advertising messages based on location? Slide 2-12

Copyright © 2011 Pearson Education, Inc. E-commerce Enablers: The Gold Rush Model E-commerce infrastructure companies have profited the most:  Hardware, software, networking, security  E-commerce software systems, payment systems  Media solutions, performance enhancement  CRM software  Databases  Hosting services, etc. Slide 2-13

Copyright © 2011 Pearson Education, Inc. How the Internet and the Web Change Business E-commerce changes industry structure by changing:  Michael Porter’s Five Forces  Basis of competition among rivals  Barriers to entry  Threat of new substitute products  Strength of suppliers  Bargaining power of buyers Slide 2-14

Copyright © 2010 Pearson Education, Inc. Slide 1-15

Copyright © 2010 Pearson Education, Inc. Industry Value Chains Set of activities performed by suppliers, manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services Internet reduces cost of information and other transactional costs Leads to greater operational efficiencies, lowering cost, prices, adding value for customers Slide 2-16

Copyright © 2010 Pearson Education, Inc. E-commerce and Industry Value Chains Figure 2.5, Page 103 Slide 2-17

Copyright © 2010 Pearson Education, Inc. Firm Value Chains Activities that a firm engages in to create final products from raw inputs Each step adds value Effect of Internet:  Increases operational efficiency  Enables product differentiation  Enables precise coordination of steps in chain Slide 2-18

Copyright © 2010 Pearson Education, Inc. E-commerce and Firm Value Chains Figure 2.6, Page 104 Slide 2-19

Value Chain Primary Activities 1. Inbound logistics (get products or services) 2. Operations (make products or services) 3. Outbound logistics (deliver products or services) 4. Marketing and sales (sell products or services) 5. Service (deal with customer issues)

Value Chain Support Activities 1. Corporate infrastructure (management and support activities) 2. Human resources 3. Technology development 4. Finance & Accounting 5. Procurement (get MRO & supplies)

1-22 © 2007 Prentice-Hall, Inc

1-23 © 2007 Prentice-Hall, Inc FBI Value Chain Source:

Value Chain for American Airlines

Analyzing Value Chain Activities What type of activity is being performed? Does it add value? Does it ensure the quality of other activities? How does the activity add value to the customer? Could the same activity be reconfigured or performed in a different way? What inputs are used? Is the expected output being produced? Is the activity vital? Could it be outsourced, deleted completely, or combined with another activity? How does information flow into and out of the activity? Is the activity a source of competitive advantage? Does the activity fit the overall goals of the organization?

E-commerce Value Chain The E-commerce Value Chain means identifying:  The competitive forces within the company’s e- commerce environment  The business model it will use  Identifying the value activities that help the e- commerce value chain do its homework E-commerce views information technology as part of a company’s value chain

Copyright © 2010 Pearson Education, Inc. Firm Value Webs Networked business ecosystem Uses Internet technology to coordinate the value chains of business partners  Within an industry  Within a group of firms Coordinates a firm’s suppliers with its own production needs using an Internet-based supply chain management system Slide 2-27

Copyright © 2010 Pearson Education, Inc. Internet-Enabled Value Web Figure 2.7, Page 105 Slide 2-28

Copyright © 2010 Pearson Education, Inc. Business Strategy Plan for achieving superior long-term returns on the capital invested in a business firm Michael Porter’s Generic Strategies h Four generic strategies 1. Differentiation 2. Cost 3. Scope 4. Focus Slide 2-29

Copyright © 2011 Pearson Education, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall